How Your Best 35 Working Years Shape Every Social Security Check
Most people know they can collect Social Security as soon as they turn age 62. But you may not understand exactly what goes into calculating those benefits.
The Social Security Administration reviews your 35 highest-earning working years to determine how much you will earn. However, if you have worked less than 35 years, any missing year will be filled with a zero, dragging your average down in the process. Here’s how you can use this rule to maximize your benefits and strategically choose the right time to tap Social Security.
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How the 35-year rule works
The Social Security Administration compiles your earnings for your 35 highest-earning years and calculates the average indexed monthly earnings (AIME). It then uses this figure to determine your benefit. Social Security provides a detailed explanation of the AIME calculation on its website.
Only earnings that are subject to Social Security payroll taxes count toward this program. Any annual earnings that exceeded the taxable maximum do not increase benefits.
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Why missing years and low-earning years matter
Low-earning years — and years that you didn’t work at all, which are counted as zeros for the administration’s calculations — will drag down your average. If you got laid off and had to job hunt or take several years away from the workforce to raise a family, those years of low earnings will affect your future Social Security check. The same goes for retiring early.
But if you work more than 35 years, those "zero" and low-earning years are replaced with higher-earning years. People tend to earn more when their career is established at age 60 than they did fresh out of college, and those extra years of work can translate into higher benefits.
What workers can control
All of your previous work years will impact your Social Security benefits. However, you can boost your income by earning more, potentially by asking for a raise, job hopping or pursuing part-time work. A higher income later in life can offset the zeros and low-earnings years that are common in early career development.
You can also work for more than 35 years to replace years you earned the smallest amounts of money with years you earned more. Extra years of work can also allow you to delay claiming Social Security, which means higher monthly checks. While you can receive benefits as early as age 62, waiting until full retirement age (66 or 67) means locking in higher benefits. Those benefits will increase even more if you wait until age 70, at which point delaying your claim won’t increase benefits anymore.
Social Security benefits aren’t just about how much you earn right now. Understanding how benefits work can help you make an informed decision about when to retire and when to claim benefits.